GBP/JPY: Short-Term Momentum Remains Bullish

The beast (otherwise known as the GBP/JPY pair) has gained 10 out of the last 12 days communicating the bounce off the lows has some decent buying behind it. What is interesting to me from an Ichimoku perspective is how 3 of the last 8 days the dips touched to the pip the daily tenkan line, finding support there and closing higher off each rejection. This tells me the pair is underpinned on the short-term, and the tenkan is confirming this further by turning upward, suggesting short-term momentum is also behind the pair.

We expect this bullishness to continue, either till the end of the week, or end of June where we expect the pair will run into the Kumo. Should this meeting with the Kumo happen around 126.45 which is also a role-reversal level, then we expect the pair is to likely reject here, making a second attempt at the downside. If this unfolds, we will watch for a tenkan-kijun cross to downside for rejoining the trend. Short-term bulls meanwhile can take intraday dips down to the tenkan and take small longs there.

Medium-term bulls will want to wait for a kumo break along with a chikou span crossing the price line before it can make an upside attack on the 131.75 swing highs from April.

Global Market Commentary
Global stocks climbed along with the euro supported by optimism the CBs of the world will offer economic assistance (read printing money and bank bailouts) to stave of the EZ debt crisis. Although this has completely failed just recently (Spanish Bailout), investors bought the story. This combined with an expectation the Fed will act and the markets gained today, despite the German ZEW posting its largest drop since 1998 and Spanish 10-yr yields still hovering around the 7% red zone. 

Regardless, the Dow added 95pts or .75% while gold fell for the first time in over a week dropping down to $1619. The S&P also gained strongly on the day adding 13pts or 1.19% approaching key resistance at 1358.

Keep in mind the FOMC rate decision is tomorrow.